ACA International v. FCC (2015 TCPA Order Litigation)

EPIC and Consumer Privacy Groups File Brief Supporting FCC in Telephone Privacy Case: EPIC and six consumer privacy organizations have filed a "friend-of-the-court" brief in support of the Federal Communications Commission in ACA International v. FCC. The case was brought against the FCC by industry groups charged with violating the Telephone Consumer Protection Act. The FCC had made clear that companies cannot make automated or prerecorded calls to consumers without their consent. EPIC argued in its brief that widespread adoption of cell phones "has amplified the nuisance and privacy invasion caused by unwanted calls and text messages." EPIC and the consumer organizations urged the federal court to uphold the FCC order safeguarding consumers. (Jan. 25, 2016)

A federal appeals court ruled today that an amendment to the federal robocall ban is unconstitutional. The Telephone Consumer Protection Act prohibits automated calls to cell phones, except in emergencies or with the consent of the called party. But in 2015 Congress created an exception for calls made to collect debts guaranteed by the federal government. The court in AAPC v. FCC found that the debt-collection exemption "undercuts" the privacy protections in the law. So the court found the exception unconstitutional and struck it from the law. EPIC filed a "friend of the court" brief in Gallion v. Charter Communications, a similar case in the Ninth Circuit, arguing that "the TCPA prohibitions are needed now more than ever." EPIC has testified in support of the TCPA and has submitted extensive comments and amicus briefs on the consumer privacy law.

The Senate Commerce Committee today approved a bill to strengthen the FCC's ability to prevent robocalls. The Telephone Robocall Abuse Criminal Enforcement and Deterrence or TRACED Act, enhances the FCC's authority to issue fines against robocallers, extends the statute of limitations, and promotes call authentication and blocking adoption. EPIC has long advocated for robust telephone privacy protections. Last week, EPIC submitted comments to the FCC recommending that the agency (1) require phone providers to block calls from numbers that are unassigned, unallocated, or invalid; (2) prohibit spoofing if there is an intent to defraud or cause harm; and (3) encourage the use of call authentication technology that safeguards caller anonymity. EPIC filed amicus briefs earlier this year and in 2015 that strengthened consumer protections for robocalls.

EPIC has filed an amicus brief urging the Supreme Court to safeguard FCC rules that protect the public from robocalls and junk faxes. The case, PDR Network v. Carlton & Harris Chiropractic, concerns a company's efforts to disregard an FCC rule about junk faxes. EPIC explained that permitting companies to avoid FCC rules "will exclude the voices of consumers" in agency decision making. EPIC also explained that the company's efforts to sidestep agency rules will benefit those "who have resources to attack FCC rules." EPIC contributed to the development of the robocall and junk fax laws. EPIC has since worked to ensure that telephone users are protected from invasive practices throughagencycomments and amicusbriefs in cases such as ACA International and Gallion v. Charter Communications.

In comments to the FCC, EPIC has renewed its call to the agency to block unlawful robocalls. The FCC proposed a rule that would allow phone companies to block calls from numbers they know are invalid, such as numbers that have not been assigned to a subscriber. EPIC recommended that the FCC (1) require phone providers to proactively block calls from numbers that are unassigned, unallocated, or invalid; (2) prohibit spoofing if there is an intent to defraud or cause harm; and (3) encourage the use of call authentication technology that safeguards caller anonymity. EPIC previously filed comments in when the FCC proposed the rule, and has long advocated for robust telephone privacy protections. EPIC filed an amicus brief in 2015 that strengthened consumer protections.

EPIC advised the FCC on how to interpret the Telephone Communications Protection Act to best protect consumers in light of the recent decision in ACA Int'l v. FCC. EPIC filed a friend of the court brief in that case arguing that consumers could revoke consent by any "reasonable means." The court agreed but vacated other aspects of the rule. Many industry groups urged the Commission to make a rule that if "any" human intervention is involved in the dialing or sorting of the list of numbers a calling system would not be considered an "automatic telephone dialing system." EPIC opposed that recommendation, explaining that such a definition would allow autodialers to use deceptive tactics to evade regulation. EPIC contributed to the development of the Telephone Communications Protection Act and regularly submits comments to the FCC.

EPIC advised the FCC on how to interpret the Telephone Communications Protection Act to best protect consumers in light of a recent decision in ACA Int'l v. FCC. EPIC filed a friend of the court brief in that case arguing that consumers could revoke consent by any "reasonable means." The court agreed but vacated other aspects of the rule. EPIC's comments argue that the FCC should require callers to meet three conditions to simplify the revocation of consent: (1) inform consumers of their right to revoke, (2) provide a simple means of revocation, and (3) comply in a timely manner. EPIC contributed to the development of the Telephone Communications Protection Act and regularly submits comments to the FCC.

In advance of a hearing on "Abusive Robocalls and How We Can Stop Them" EPIC recommended reforms that would combat fraud while protecting privacy. EPIC supports regulations that would (1) allow phone providers to proactively block numbers that are unassigned, unallocated, or invalid; (2) block invalid numbers without requiring consumer consent; (3) provide strong security measures for any database of blocked numbers; and (4) prohibit spoofing with the intent to defraud or cause harm. EPIC played a leading role in the creation of the Telephone Consumer Protection Act and continues to defend the Act.

A federal appeals court ruled today in a closely watched case concerning robocalls. The rule under review in ACA International v. FCC concerned the FCC's regulations for the Telephone Consumer Protection Act. EPIC filed a friend of the court brief in the case in support of the FCC regulations. EPIC said that companies "seeking to engage in privacy-invading business practices" bear "the burden of proving consent." The court agreed that consumers could withdraw consent by all "reasonable means." However, the court vacated other aspects of the rule, including the definition of automated telephone dialing system and proposed procedures for calls to reassigned numbers.

The federal appeals court in Washington, D.C. heard oral arguments Wednesday in a case with major implications for telephone privacy. The suit, ACA International v. FCC, was brought against the Federal Communications Commission by telemarketing companies and others challenging rules adopted under the Telephone Consumer Protection Act that prohibit automated calls made to cell phones without their consent. EPIC and six consumer privacy groups filed an amicus brief in the case, stressing the importance of privacy protections for cell phone users. EPIC also challenged a claim made by the telemarketers that "37 million" numbers were reassigned each year, making it difficult, the companies claimed, to comply with the privacy law. During the argument, one of the judges pressed the telemarketers' attorney on the point (audio), citing research in the EPIC amicus brief. EPIC frequently participates as amicus curiae in cases that raises novel privacy issues.

EPIC and a coalition of consumer privacy advocates have urged the Federal Communications Commission to reject a request by health insurance companies to make unlimited health-related robocalls to consumers under the Telephone Consumer Protection Act. The insurance companies asked the FCC to amend the TCPA so that once a consumer provides her phone number to her doctor, she has "consented" to receiving telemarketing calls from other health care providers on anything medically related. The coalition comments, led by the National Consumer Law Center, urge the FCC to limit the scope of consumers' consent to medical robocalls by exclude telemarketing calls and allowing only calls related to the original reason the consumer provided her phone number. EPIC supports robust telephone privacy protections and filed an amicus brief in support of the FCC's 2015 order that strengthened consumer protections under the TCPA.

EPIC has sent a letter to the House Energy and Commerce Committee in advance of the hearing on “Modernizing the Telephone Consumer Protection Act.” The telemarketing law bars telemarketers and robocallers from contacting consumers by phone fax, or text without prior consent. EPIC urged the Committee to ensure that an update to the law “protects consumers from unwanted commercial communications.” EPIC said legal rights should be “robust, enforceable and minimally burdensome for consumers." Earlier this year, EPIC filed an amicus brief in support of strengthening TCPA protections for consumers. EPIC has also testified before Congress about the telemarketing law and submittedmanycomments concerning its implementation.

EPIC and a coalition of consumer groups have petitioned the FCC to reverse its recent decision to exempt federal contractors from restrictions on telemarketing and robocalls. The FCC incorrectly determined that the Telephone Consumer Protection Act (TCPA) “does not apply to calls made by or on behalf of the federal government in the conduct of official government business.” The petition, led by the National Consumer Law Center, warns of significant increases in unwanted robocalls from government contractors that consumers would be powerless to stop. EPIC supports robust telephone privacy protections and filed an amicus brief in support of the FCC’s 2015 order that strengthened consumer protections under the TCPA.

The Senate Commerce Committee held a hearing yesterday on the Telephone Consumer Protection Act. The "TCPA" bars telemarketers and robocallers from contacting consumers by phone or fax without prior express consent. In January, EPIC filed an amicus brief to provide greater TCPA protections for consumers. EPIC said that widespread use of cellphones “has amplified the nuisance and privacy invasion caused by unwanted calls and text messages.” EPIC has testified before Congress about the TCPA and submittedmanycommentsconcerningtheimplementation of the consumer privacy law.

EPIC and six consumer privacy organizations have filed a "friend-of-the-court" brief in support of the Federal Communications Commission in ACA International v. FCC. The case was brought against the FCC by industry groups charged with violating the Telephone Consumer Protection Act. The FCC had made clear that companies cannot make automated or prerecorded calls to consumers without their consent. EPIC argued in its brief that widespread adoption of cell phones "has amplified the nuisance and privacy invasion caused by unwanted calls and text messages." EPIC and the consumer organizations urged the federal court to uphold the FCC order safeguarding consumers.

The Supreme Court has ruled that a company cannot terminate class action litigation by strategically making a settlement offer of full relief to individual plaintiffs. The case, Campbell-Ewald Co. v. Gomez, involved a consumer who refused to drop his Telephone Consumer Protection Act lawsuit in exchange for such an offer. The defendant company argued that the offer, which exceeded the statutory damages under the TCPA, mooted his case. The Justices disagreed, ruling 6-3 that "an unaccepted settlement offer has no force. Like other unaccepted contract offers, it creates no lasting right or obligation." EPIC routinely works to protect consumer privacy interests in class action settlements.

Almost a dozen senators have urged the Federal Communications Commission to uphold consumer privacy protections within the Telephone Consumer Protection Act. Next week the Commission will vote on two dozen proposals seeking to relax enforcement of the Act. According to Senator Markey and others, the FCC's recommendation to permit unsolicited texts and calls without consumer consent "would threaten privacy and result in an increase in disruptive and annoying calls for American consumers." The Commission will vote on the proposals during an Open Meeting on June 18, 2015. EPIC supported enactment of the TCPA and has advocated for strong enforcement.

Summary

The Telephone Consumer Protection Act, or TCPA, bars telemarketers and robocallers from contacting consumers by phone or fax without prior express consent. In 2015, the Federal Communications Commission (FCC) issued an order and declaratory ruling, interpreting the TCPA in a way that provided greater privacy protections to consumers. In particular, the 2015 Order: (1) defined autodialers to include any equipment that has the capacity to autodial numbers; (2) recognized that the TCPA grants consumers the right to revoke their consent via any reasonable means; (3) determined that the TCPA bars calls without the consent of the current subscriber, not the intended recipient, and held that telemarketers have a one-call safe harbor to call reassigned numbers without accruing liability; and (4) allowed HIPAA-protected calls to cell phones to be made without consent only when the call has exigency and a healthcare treatment purpose. A number of companies and organizations interested in telemarketing and robocalling consumers have challenged the FCC's 2015 Order in the U.S. Court of Appeals for the District of Columbia, arguing that it is unlawful.

Questions Presented

Petitioners and Interveners challenge four key holdings in the 2015 Order:

An automatic telephone dialing system (“ATDS” or “autodialer”) includes equipment that “has the capacity to store or produce, and dial remand or sequential numbers . . . even if it is not presently used for that purpose.” Predictive dialers also qualify as autodialers.

The TCPA requires the consent of “the current subscriber (or non-subscriber customary user of the phone)”, not the consent of the “intended recipient.” A caller who believes he has consent and doesn’t discover that the number has been reassigned has a one-call safe harbor. The caller “may reasonably be considered to have constructive knowledge—if not actual knowledge—of the revocation of consent provided by the original subscriber to the number when the caller makes the first call without reaching that original subscriber.”

Consumers “may revoke consent through any reasonable means,” and “callers may not control consumers’ ability to revoke consent.”

Background

The Telephone Consumer Protection Act

In simple terms, the Telephone Consumer Protection Act of 1991 and its progeny bar most autodialed or prerecorded calls, texts, or faxes unless made with prior express consent. For telephonic communications, the TCPA and the FCC’s implementing regulations distinguish between calls to residential numbers and calls and texts to wireless numbers. The FCC’s implementing regulations have also narrowed the categories of communications subject to TCPA liability.

The TCPA grants consumers a private right of action to enforce the Act against telemarketers and robocallers. Callers can face a penalty of up to $500 or the actual monetary loss in damages per violation, whichever is greater, and treble damages for each willful or knowing violation.

Residential Numbers

The TCPA bars all non-emergency calls using an artificial or prerecorded voice without prior express consent of the called party, unless the call is made solely to collect a debt owed to or guaranteed by the United States. The TCPA also allows the FCC at its discretion to exempt certain calls pursuant to its authority under 47 U.S.C. § 227(b)(2). Section 227(b)(2)(B) empowers the FCC to issue rules exempting calls to residential numbers that are not made for commercial purposes or that are made for commercial purposes but do not adversely affect privacy rights and do not include unsolicited advertisements.

The FCC’s regulations further require that the prior express consent must be written. Under the FCC’s regulations, no consent if any kind is required if the call:

Is made for emergency purposes;

Is not made for commercial purposes;

Is made for commercial purposes but does not include or introduce an advertisement or constitute telemarking;

Is made by or on behalf of a tax-exempt nonprofit; or

Delivers a health care message as defined under HIPAA.

Wireless Numbers

The TCPA bars all non-emergency communications using an ATDS/autodialer or an artificial or prerecorded voice without prior express consent, unless the call is made solely to collect a debt owed to or guaranteed by the United States. The TCPA also allows the FCC at its discretion to exempt certain calls pursuant to its authority under 47 U.S.C. § 227(b)(2). Section 227(b)(2)(C) empowers the FCC to issue rules exempting calls to wireless numbers that “are not charged to the called party, subject to such conditions as the Commission may prescribe as necessary in the interest of the privacy rights this section is intended to protect.”

Under the FCC's regulations, the form of consent depends on the content of the communication:

Prior express written consent of the called party if the call introduces an advertisement or constitutes telemarketing;

Prior express written or oral consent of the called party if the call:

Does not include or introduces an advertisement or constitutes telemarketing;

Introduces an advertisement or constitutes telemarketing made by or on behalf of a tax-exempt nonprofit; or

Delivers a health care message as defined under HIPAA.

The 2015 FCC Declaratory Ruling and Order

On June 18, 2015, the FCC issued a Declaratory Ruling and Order addressing 21 petitions for review, clarification, or rulemaking. The 2015 Order issued a number of decisions related to the TCPA, four of which have been challenged by the Petitioners in this case.

Interpretation of ATDS

The TCPA defines an ATDS as “equipment which has the capacity—(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” The FCC defines the basic functions of an autodialer as the ability to “dial numbers without human intervention” and “dial thousands of numbers in a short period of time.”

Building on its prior statements, the TCPA declared that an ATDS is defined not by its current configuration but by its potential functionalities. In particular, an ATDS is any “dialing equipment [that] generally has the capacity to store or produce, and dial random or sequential numbers” even if “it is not presently used for that purpose, including when the caller is calling a set list of consumers.” There must be “more than a theoretical potential that the equipment could be modified to satisfy the ‘autodialer’ definition,” but equipment can still qualify as ATDS even if it lacks the “necessary software.”

As a limiting principle, the FCC noted that a rotary-dial phone would not be considered to have the capacity of autodialing. The FCC also rejected petitioner concerns that such a broad definition could sweep in smartphones, noting that “there is no evidence in the record that individual consumers have been sued based on typical use of smartphone technology,” nor is there evidence that the called parties of smartphone communications find the calls unwanted and bring legal action.

The TCPA also reaffirmed its recognition that predictive dialers qualify as ATDS. A predictive dialer is “equipment that dials numbers and, when certain computer software is attached, also assists telemarketers in predicting when a sales agent will be available to take calls. The hardware, when paired with certain software, has the capacity to store or produce numbers and dial those numbers at random, in sequential order, or from a database of numbers.”

Finally, the FCC held that “that parties cannot circumvent the TCPA by dividing ownership of dialing equipment.”

Revocation of Consent

Neither the TCPA nor the FCC’s prior orders expressly recognize that consumers have a right to revoke consent. In the 2015 Order, therefore, the FCC construed the TCPA to grant consumers the right to revoke consent “if they decide they no longer wish to receive voice calls or texts.”

The FCC further construed the TCPA to find that “consumers may revoke consent through any reasonable means,” including orally or in writing. In other words, callers are not allowed to “control consumers’ ability to revoke consent.” To allow callers to dictate how the consumer could exercise her right to revoke consent would “materially impair that right” and would “place a significant burden on the called party who no longer wishes to receive such calls, which is inconsistent with the TCPA.”

“Called Party,” Reassigned Numbers, and the One Call Safe Harbor

The TCPA bars most telephonic communications absent express prior consent of the “called party,” but neither the TCPA nor the FCC’s prior orders define the word “called party.” In the 2015 order, the FCC interpreted the phrase “called party” to mean the “current subscriber” and not the “intended recipient.” The FCC also included in its definition of “called party” those “individuals who might not be the subscriber, but who, due to their relationship to the subscriber, are the number’s customary user and can provide prior express consent for the call.” The FCC based its decision on the facts that the TCPA does not indicate that caller intent is relevant, that the intended beneficiary is too subjective a standard to allow for effective enforcement, that consent of one party cannot be binding on another, and that consumers who inherit wireless numbers neither expect nor desire these calls.

The FCC next determined the applicability of the TCPA to reassigned numbers. The Commission determined that “where a caller believes he has consent to make a call and does not discover that a wireless number had been reassigned prior to making or initiating a call to that number for the first time after reassignment, liability should not attach for that first call, but the caller is liable for any calls thereafter.” In other words, telemarketers and robocallers have a one call safe harbor in which they can contact a consenting called party who has changed numbers. But where the new subscriber has not consented to the calls, the FCC determined that the caller “may reasonably be considered to have constructive knowledge—if not actual knowledge—of the revocation of consent” when the caller does not reach the original subscriber during the first call.

Finally, the FCC declined to add a bad-faith defense to void liability if the called party waits to notify the telemarketer if the changed number in order to accrue liability. Instead, the FCC observed that “uninvolved new users of reassigned numbers are not obligated under the TCPA or our rules to answer every call, nor are they required to contact each caller to opt out in order to stop further calls.”

HIPAA-Protected Communications

As discussed above, the TCPA and the FCC distinguish between residential numbers and wireless numbers when addressing healthcare calls protected by the Health Insurance Portability and Accountability Act of 1996, or HIPAA. Prior to the 2015 Order, HIPAA-protected calls to residential numbers required no consent, but those same calls to wireless numbers required express prior consent (oral or written).

In the 2015 Order, the FCC chose to exempt only some HIPAA-protected calls to wireless numbers from the prior express consent requirement. Only those calls “for which there is exigency and that have a healthcare treatment purpose”—such as appointment reminders, wellness checkups, pre-operative instructions, lab results, and prescription notifications—can be made to wireless numbers without prior express consent. All other HIPAA-protected calls to wireless numbers, such as those regarding account communications or payment notifications, still require prior express consent.

Procedural History

Petition 15-1211 was originally brought by ACA International on July 10, 2015, the date the FCC order was released to the public. Eight other petitions were also filed and subsequently consolidated.

The Petitioners and Interveners bring various legal challenges to the above four sections of the 2015 Order, arguing that the FCC’s determinations are arbitrary and capricious in violation of the Administrative Procedures Act, are contrary to the text of the TCPA, and violate the constitutional guarantees of due process and the free speech.

EPIC's Interest

EPIC contributed to the development of the TCPA, and has advised Congress about emerging challenges to the consumer protection law. In 2004, EPIC testified before US Senate Committee on Commerce, Science, and Transportation about the privacy issues raised by a proposed wireless directory for customers of wireless telephone services. EPIC stood up for a consumer friendly standard for enrollment, which requires an opt-in system that ensures adequate notice and requires affirmative consent. EPIC also opposed junk faxes, which are faxes sent without consent and which effectively shift the cost of marketing to the consumer (who must pay for ink and paper).

EPIC has also submitted numerous comments to the FCC and the Federal Trade Commission concerning the implementation of the TCPA. In April 2002, EPIC addressed an FCC telemarking rulemaking in joint comments submitted with other consumer organizations. EPIC stated that “telemarketing is one of the negative consequences of a lack of information privacy law in America.” EPIC’s comments focused on the privacy issues surrounding personal information transfer and practical suggestions for providing individuals with substantive approaches to ending telemarketing calls.

In December 2002, EPIC and other consumer organizations submitted comments to the FCC regarding Rules and Regulations Implementing the TCPA. EPIC argued that “telemarketing is regularly identified as an obnoxious and unwanted intrusion into the privacy of the home.” Detailed consumer databases raise a number of privacy risks because they include health information, religious affiliation, book reading preferences, financial information, and product ownership. EPIC emphasized that an opt-in approach to telemarketing would more effectively protect individuals’ rights and ensure that only those who wish to be called receive solicitations.

In July 2005 comments, EPIC urged the FCC not to preempt strong state anti-telemarketing laws, warning this would lead to a massive increase of unwanted sales calls. In January 2006 comments, EPIC again warned against preempting state anti-telemarketing laws, this time urging protection of California’s heightened protections against junk faxes.

In January 2006, EPIC submitted comments to the FCC recommending protections to shield individuals against junk faxes. These comments were submitted following the passage of the Junk Fax Prevention Act, which requires senders of unsolicited commercial fax messages to broadcast privacy notices and instructions on how to opt out. And in May 2006, EPIC urged the FCC to reject a petition by ACA International that would allow use of auto dialers by debt collectors. EPIC told the agency that Congress clearly demonstrated an intent to bar auto dialers when it passed the TCPA, supporting FCC's rules promulgated on this issue.

In a 2004 case, Carnett's Inc. v. Michelle Hammond, the Georgia Supreme Court considered whether certain individuals could bring class action suits under the TCPA, and whether an "established business relationship" exemption existed that would have permitted the sending of unwanted faxes. EPIC filed an amicus brief, arguing that “[j]unk faxing is simply electronic trespass as a means to committing advertising by theft-the electronic equivalent of junk mail sent postage due.” EPIC's brief defended the class action mechanism as necessary to meaningfully enforce federal consumer protection laws. EPIC also argued that there was no "established business relationship" exemption to the TCPA. The Georgia Supreme Court reversed the intermediate court and held that trial court did not err in denying class certification.